Slum Rehabilitation Authority, Mumbai vs M. m. Project Consultants Private Limited, Mumbai

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(Bom) 578

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Kulkarni, J.
Slum Rehabilitation Authority, Mumbai - Appellant
Versus
M.m. Project Consultants Private Limited, Mumbai - Respondent
Commercial Arbitration Petition No. 557 of 2018
Decided On : 16-06-2020

Advocates Appeared:
Darius Khambata, Advocate, Mustafa Doctor, Advocate, Jehangir Jejeebhoy, Advocate, Anita Irani, Advocate, Samridhi Lodha, Advocate, Kanga & Company, Advocate, Haresh Jagtiani, Advocate, Apurva Manwani, Advocate, Bhavi Vora, Advocate, Sakrut Srivastava, Advocate, Priyanka Kapadia, Advocate, Shddhesh Suresh Bhole, Advocate

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge to arbitration award for wrongful termination of contract - Tribunal found termination illegal, awarding damages of Rs.86.72 crores for loss of profit - Petitioner contended that contract was repudiated by respondent's demand for retention money contrary to terms, and that termination was valid which tribunal failed to recognize - Court found the tribunal overlooked evidence, rendered perverse interpretations of contract clauses, and awarded speculative damages without proper basis. (Paras 122-124)

(B) Termination of Contracts - Repudiation - Respondent’s actions deemed as repudiation of contract, rendering arbitration proceeding invalid. (Paras 53-56)

(C) Awards - Legality - Damages awarded based on unrealized potential revenue ignoring actual project status which had ceased operations. (Paras 87-120)

(D) Public Policy - Arbitration award set aside due to fundamental policy violations and lack of evidence for award. (Paras 123-126)

Table of Content
1. introduction and background of the case (Para 1 , 3 , 4 , 5 , 6)
2. details of the agreement and project (Para 7 , 8 , 9 , 10 , 11 , 12 , 13)
3. issues from the arbitration and termination (Para 14 , 15 , 16 , 17 , 18)
4. claims and counterclaims during arbitration (Para 19 , 20 , 21 , 22)
5. submissions by petitioner and respondent (Para 34 , 35)
6. court's initial observations (Para 36 , 37 , 39 , 43)
7. discussion on repudiation of contract (Para 44 , 45 , 46 , 47 , 50)
8. legal standards for termination (Para 74 , 75 , 76 , 80)
9. principles for awarding damages (Para 86 , 112 , 118 , 119)
10. final conclusion of the court (Para 122)

JUDGMENT

G S Kulkarni, J. - This is a Petition under section 34 of the Arbitration and Conciliation Act, 1996 ( for short ''ACA'') whereby the Petitioner challenges an arbitral Award dated 15 January 2018 passed by a three-Member Arbitral Tribunal. The impugned award partly allows the claims as made by the respondent/claimant in the arbitral proceedings, to the extent that a claim for damages for an amount of Rs.86.72 crores for wrongful termination of the contract, as entered between the parties stands awarded against the petitioner. The arbitral tribunal also has awarded interest at 9 % per annum on the award amount from the date of claim till payment or realization .

2. For convenience the contents of this judgment parawise would be as under:-

Paragraph Nos.	Contents
3 to 33	Facts
34(i) to (xxxv)	Submissions on behalf of the Petitioner
35(i) to (xxxii)	Submissions on behalf of the Respondent
36	Reasons
41	Contractual provisions
42	Questions involved
43	Discussion on (i) Whether the Respondent repudiated the PMC agreement.
66	Discussion on (ii) As to whether the termination of the PMC agreement by the petitioner was legal and valid ?
86	Discussion on (iii) Whether the arbitral tribunal is correct in law and facts in awarding damages?
122	Conclusion

The factual antecedents leading to the litigation can briefly be summarized:-

3. The Petitioner is a statutory body constituted by the Government of Maharashtra under the Maharashtra Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971. The Respondent is a company incorporated under the provisions of the Companies Act, 1956 and for all purposes was represented, by its Chairman and Director Mr.Mukesh Mehta (for short ''Mr. Mehta'')

4. The disputes between the parties concern an agreement between the parties entered in the year 2008 appointing the respondent as a Project Management Consultant (PMC), for a peculiar project concerning development of the ''Dharavi Slum Area'' in Mumbai, one of the biggest slums in Asia, at the relevant time covering an area of 151 hectares, about 46189 residents and approximately 12976 small and medium-sized business establishments. The details of this agreement are discussed in detail in the ensuing paragraphs.

5. In or about 1988-89, the Government of Maharashtra, is stated to have introduced the concept of Cluster Type Re-development through people''s participation. In or about 1996, the Government started undertaking various schemes in the slum areas in Mumbai, for which the Petitioner was designated as the Project Authority.

6. In or about 2004, the Government of Maharashtra took a decision to replicate the concept of ''Sectoral Cluster Type Re-development in the "Dharavi Area''. Due to the complex nature of this re-development and the huge cost which would be incurred, it was decided to re-develop Dharavi through a process of "Public Private Participation" by dividing Dharavi into various sectors. For t

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Judicial Analysis

2020 Supreme(Bom) 578

IN THE HIGH COURT OF JUDICATURE AT BOMBAYG.S. Kulkarni, J.Slum Rehabilitation Authority, Mumbai - AppellantVersusM.m. Project Consultants Private Limited, Mumbai - RespondentCommercial Arbitration Petition No. 557 of 2018Decided On : 16-06-2020

Cases Referred (11)

Judicial Analysis

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G.S. Kulkarni, J.
Slum Rehabilitation Authority, Mumbai - Appellant
Versus
M.m. Project Consultants Private Limited, Mumbai - Respondent
Commercial Arbitration Petition No. 557 of 2018
Decided On : 16-06-2020